Colorado’s Taxpayer’s Bill of Rights is numbingly complex. Now, a bipartisan coalition led by House Speaker Andrew Romanoff, D-Denver, and Sen. Steve Johnson, R-Fort Collins, is trying to make the 1,800-word amendment almost as simple in practice as most voters believe it is in principle.
Ask Joe and Suzy Sixpack about TABOR and they’ll probably say, “It says the politicians can’t increase our taxes without our voting to approve such an increase.”
TABOR does indeed say that. But it also says state and local governments can’t even keep the money your existing taxes raise unless you also give them a separate “mother-may-I” at the polls.
That’s because TABOR isn’t really a tax limit, it’s a revenue limit. And if the money collected from existing taxes exceeds that revenue limit, the difference must be given back to the taxpayers in the form of annual rebates or permanent tax cuts.
Each year’s revenue limit, in turn, is based on the previous year’s limit, plus an amount equal to the consumer price index for urban wage earners in the Denver-Boulder area and any estimated change in population.
For many reasons, that adjustment is not enough to keep state budgets up to the task of fixing our highways or supporting our schools.
In the case of highways, state Treasurer Cary Kennedy notes that the consumer price index has risen 38 percent since 1991 — the last time Colorado raised its gasoline tax, to the current 22 cents.
But the construction cost index — a far more significant measure of the cost of the steel and asphalt needed to build and maintain the roads and bridges upon which Colorado’s economy depends — has risen 58 percent since 1991.
Thus, even if we had indexed our fuel tax to inflation as measured by the CPI in 1991 (and, alas, we did not), we would have still lost about 20 percent of the tax’s actual purchasing power by now.
The CPI measures the cost of things ordinary consumers buy, like televisions. Those have gone up very little or even fallen in price, partly because we import them after paying some poor devil in China $5 a day to make them. But the state government mostly spends on things like highways that have to be made with locally produced concrete made by American craftsmen earning American wages. For that reason, the CPI as reflected in TABOR never accurately measures the real rate of inflation faced by public entities.
Even more important, by deliberately limiting revenue increases to just inflation as measured by the CPI and population growth, TABOR ensures state government will shrink as a share of the state economy. It does that by deliberately excluding real economic growth from the state’s revenue base. And, of course, real growth is the reason mankind no longer lives in caves.
TABOR’s deliberate shrinkage of state government can be simply illustrated by assuming that Colorado received $100 in revenue last year, while inflation as measured by the Denver-Boulder CPI was 3 percent. If population also rose 1 percent, the TABOR formula would limit this year’s revenue to $104. But if the state actually collected $106, because the economy experienced 2 percent real growth in addition to inflation and population, the extra $2 would have to be refunded.
That 2 percent difference doesn’t seem like much but compounded over 10 years, it would cut the state’s allowable budget limit by $31, from $179 to $148. Thus, the state budget would have shrunk by about 17 percent as a share of the state economy. And by not allowing the state’s budget to keep pace with the Colorado economy, TABOR is slowly starving the very programs upon which that economic growth depends, notably transportation and higher education.
As it affects TABOR, the reform measure crafted by Romanoff and Johnson would simply make the 5-year “time out” from TABOR’s revenue limits permanent by letting the state keep all the money it raises from its existing taxes. The state would still have to ask your approval to actually increase taxes.
And that’s the way it should be.
Bob Ewegen (bewegen@denverpost.com) is deputy editorial page editor of The Denver Post.
